Hattingh v Furman and Others NNO (388/2019) [2020] ZASCA 123 (5 October 2020)

Hattingh v Furman and Others NNO (388/2019) [2020] ZASCA 123 (5 October 2020)

The majority of the Supreme Court of Appeal held that the Addendum to the Memorandum of Agreement (AMA) was a simulated transaction, intended to conceal Hattingh's member's interest from the heirs of his late wife, rather than genuinely divesting him of that interest. The evidence demonstrated that Hattingh continued to act as general manager and retained the ability to reclaim his member's interest, indicating that the parties did not intend the AMA to have its apparent legal effect. Consequently, Hattingh did not withdraw from the business as contemplated by clause 13.1.3 of the Buy and Sell Agreement (BSA), and the BSA remained operative. Therefore, Hattingh was obliged to pay the...

Citation
[2020] ZASCA 123
Parties
Appellant: Carl Frank Hattingh; Respondent: Darrel Furman NO; Respondent: Gregory Paul Weinbren NO; Respondent: Dean Adam Weinbren NO; Respondent: Rowan Furman NO
Court
Supreme Court of Appeal
Jurisdiction
South Africa
Judgment Date
5 October 2020
Case Number
388/2019
Procedural Posture
Leave to Appeal / Supreme Court of Appeal Judgment on Application for Leave to Appeal and Merits
Outcome
Application for leave to appeal dismissed with costs.
Judges
Ponnan, Van Der Merwe, Molemela, Mbatha, Ledwaba
Legal Topics
Close Corporation Membership, Buy and Sell Agreement, Contract Interpretation, Simulated Transaction, Termination of Agreement
Commercial and Corporate Civil Procedure Close Corporation Membership Buy and Sell Agreement Contract Interpretation Simulated Transaction Termination of Agreement

Case Brief

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Parties

Carl Frank Hattingh

Appellant

Darrel Furman NO

Respondent

Gregory Paul Weinbren NO

Respondent

Dean Adam Weinbren NO

Respondent

Rowan Furman NO

Respondent

Procedural Posture

Leave to Appeal / Supreme Court of Appeal Judgment on Application for Leave to Appeal and Merits

Legal Issues

  1. 1 Whether the Buy and Sell Agreement (BSA) was valid and enforceable at the time of Weinbren's death.
  2. 2 Whether the Addendum to the Memorandum of Agreement (AMA) constituted a genuine or simulated transaction.
  3. 3 Whether Hattingh's withdrawal from the close corporation terminated the BSA under clause 13.1.3.

Ratio Decidendi

The majority of the Supreme Court of Appeal held that the Addendum to the Memorandum of Agreement (AMA) was a simulated transaction, intended to conceal Hattingh's member's interest from the heirs of his late wife, rather than genuinely divesting him of that interest. The evidence demonstrated that Hattingh continued to act as general manager and retained the ability to reclaim his member's interest, indicating that the parties did not intend the AMA to have its apparent legal effect. Consequently, Hattingh did not withdraw from the business as contemplated by clause 13.1.3 of the Buy and Sell Agreement (BSA), and the BSA remained operative. Therefore, Hattingh was obliged to pay the...

Court Disposition

Application for leave to appeal dismissed with costs.

Orders

  • Condonation for the late filing of the special application for leave to appeal is granted.
  • Application for leave to appeal is dismissed with costs.